Accenture CEO: Watch Out Traditional IT Companies, We're Gaining Market Share

Accenture has bet big on digital technologies and cost rationalization for its clients, and CEO Pierre Nanterme said the systems integrator, No. 3 on CRN's Solution Provider 500 list, is seeing its push pay off as it gains market share against its traditional IT competitors.

"Given our strong double-digit growth now for almost four years in a row in the U.S., [market share] is probably a place where we're accelerating our gain. We are probably gaining against clearly the more traditional players of our basket of our competitors," Nanterme said on the company's second-quarter earnings call on Thursday morning.

Nanterme said Accenture is growing more on par with the "best of the pure players" in the areas it operates in, shown by continued strong broad-based revenue growth in its second-quarter earnings. Sales for the quarter, which ended Feb. 28, were up 5 percent year-over-year to $7.5 billion. Net income for the second quarter came in at $743 million, a jump of 3 percent over the previous quarter.

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The global systems integrator company saw sales growth in both its consulting and outsourcing businesses, it said, with consulting up 4 percent year-over-year to $3.84 billion in sales, and outsourcing up 6 percent year-over-year to $3.65 billion. New bookings were also on the rise with $9.4 billion over the quarter, the second highest in the company's history, of which 45 percent was in consulting and the remainder in outsourcing.

CFO David Rowland, however, said the real shining star for Accenture was its growing digital business, which saw strong double-digit growth across multiple areas of the business and accounted for 20 percent of total revenue for the first half of the year. Naterme said that growth shows that the investments Accenture has made "ahead of the curve" in strategic solutions, such as digital and cost rationalization, are starting to pay off.

"We are seeing demand for digital across all dimensions of the business, in every industry and around the world," Naterme said. "We are clearly benefiting from the investment we have made in this space."

Some of those investments include multiple recent acquisitions, including in February of public-sector digital solutions company Agilex Technologies, and its March acquisition of Brazilian advanced analytics and logistics firm Gaspo. Accenture also made investments around interactive analytics, cloud and mobility. In December 2013, Accenture integrated its digital approach platform under Accenture Digital, which integrated Accenture Interactive, Accenture Analytics and Accenture Mobility.

"As you know, the world has changed significantly, and we have put a lot of thought in Accenture as to what it takes to be relevant in this new world and to respond to the needs of our clients," Naterme said. "That's why we come with this vision around, at the end of the day, it's all going to be the digitization of our clients and the rationalization of their operations. We significantly aligned the Accenture strategic agenda toward the investments of those two key trends."

The ultimate goal of going digital, Naterme said, is to differentiate Accenture in the market against its more traditional IT competitors and provide clients with innovative solutions and capabilities.

"Digitalization is all about helping our clients tap into new sources of value and new sources of revenue to create a competitive advantage," Naterme said. "We are helping our clients capitalize on this trend to become disrupters in the digital world, not to be disrupted."

Going forward, Accenture expects to see third-quarter net revenue between $7.35 billion and $7.6 billion. The systems integrator also raised its outlook to expect an 8 percent to 10 percent increase in revenue for the full year, up from 5 percent to 8 percent previously.

"Looking ahead, based on the successful execution of our growth strategy, I feel confident in our ability to deliver sustainable, profitable growth over the long term," Nanterme said.

PUBLISHED MARCH 26, 2015